The con of the Student Loan

The_One_Who

Would you rather pay for everything yourself?

laurenzo99

the way i see it is that you know what you are getting into when you take out a student loan. We are a lot better off with student loan than high street loans, credit cards and overdrafts

bestpud

stevewolst wrote: »

Apologies if my second point was incorrect. I did not mean to mislead anyone.

My point of the post is simply to bring attention to the cost of re-paying a student loan!

I don't think you are correct in your first one either tbh, although I may be wrong.

Are you assuming the interest is added to the original sum?

Oldernotwiser

It makes more sense to look on your repayments as a graduate tax, rather than worrying about actually repaying them. This option was considered at the time that loans were introduced but it was considered to be too much of a vote loser. Student loans are a very soft option and not worth worrying about, concentrate your energy into avoiding bank and credit card debt instead.

Karl.H_2

stevewolst wrote: »

I want to bring attention to the untold facts of the student loan.

I never thought about it that way. It would be nice if student loans were cheaper, and we didn't have tuition fees. 3k for a few lectures a week doesn't seem fair, and in many cases poor teaching quality. But that's an issue in itself.

pavlovs_dog

of course, students would get better value for money if they bother to turn up to lectures, prepare for seminars so that they can benefit from discussion etc. sadly in my experience an ever increasing number are there for the social life and see lectures as a chore :rolleyes:

aqueoushumour01

bestpud wrote: »

I may be wrong here, but, if you pay £78 a month then that is actually coming off the original loan of £19, 425, isn't it?

It isn't like a normal loan whereby the 4.8% interest is added to the original loan every year?

So, if you pay £78 a month for a year, then your outstanding balance will have decreased from £19,425 to £18,489, or tha actual amount you have paid (if I've subtracted that correctly)?

So if you paid £112 a month for 26 years, you'd have paid over twice your original loan off? ie it would only take half that time to be free of it in reality?

You never actually owe more than than original sum if it goes up with inflation so you are not simply paying off interest at all, are you?

what they're saying is that by paying £78 a month, the amount of the loan in nominal terms stays the same (i'm assuming this £78 figure is correct - im too tired to check!) So you're paying £78 x 12 each year but the value of the loan in nominal terms doesn't change! Ok, the real value of that is falling each year, but whether the interest rate is really equal to the rate of inflation is another matter. I'm not going to get into the debate.;)

bestpud

aqueoushumour01 wrote: »

what they're saying is that by paying £78 a month, the amount of the loan in nominal terms stays the same (i'm assuming this £78 figure is correct - im too tired to check!) So you're paying £78 x 12 each year but the value of the loan in nominal terms doesn't change! Ok, the real value of that is falling each year, but whether the interest rate is really equal to the rate of inflation is another matter. I'm not going to get into the debate.;)

I don't know if I'm being thick, but I don't understand at all.

Of course there is interest but in real terms, the outstanding balance remains the same, so long as the interest is in line with inflation.

I think the benefit of student loans is exaggerated sometimes though. While it is relatively good, it is still a debt and the way it is sold makes it seem anything but that really. However, it is a fact of HE now so we have little choice but to accept it.

I'm not sure it is helpful to scare people though! It isn't ideal but, without it, most could not go to uni.

CLAPTON

bestpud wrote: »

I don't know if I'm being thick, but I don't understand at all.

Of course there is interest but in real terms, the outstanding balance remains the same, so long as the interest is in line with inflation.

I think the benefit of student loans is exaggerated sometimes though. While it is relatively good, it is still a debt and the way it is sold makes it seem anything but that really. However, it is a fact of HE now so we have little choice but to accept it.

I'm not sure it is helpful to scare people though! It isn't ideal but, without it, most could not go to uni.

no

the balance at any one time is the sum of the original loan plus the interest minus any repayments... just like any other loan...

except that the interest rate is mathematically equal to the RTI in March each year and applied from the following september throught ot august...

So the March 2008 RPI figure was 3.8%; so from September 2008 to August 2009 the debt will be charged at an interest rate of 3.8%.

bestpud

CLAPTON wrote: »

no

the balance at any one time is the sum of the original loan plus the interest minus any repayments... just like any other loan...

except that the interest rate is mathematically equal to the RTI in March each year and applied from the following september throught ot august...

So the March 2008 RPI figure was 3.8%; so from September 2008 to August 2009 the debt will be charged at an interest rate of 3.8%.

Which bit are you saying 'no' to?

I realise interest is added - of course it is. But, if it is linked with inflation, doesn't the amount remain the same?

As in, if I get a certain salary this year and get a pay rise equal to inflation - I may be getting more money but it has the same value because inflation has made everything go up?

I'm still not sure if I'm being thick though! :rotfl: